Leading off today, the OECD, the Organisation for Economic Co-operation and Development says that Australia is leading the developed world out of the pandemic-induced recession …
… while at the same time urging governments in Australia to reform labour markets, taxes and regulation to ensure a sustained recovery.
The OECD also urged the Fed Government not to withdraw its emergency spending too quickly and advised Australia to consider further stimulus to boost incomes and reduce unemployment.
The OECD says Australia is competing with South Korea and China as the country showing the greatest economic resilience.
It forecasts that the Aust economy will rebound next year, with a rise of 4.1% provided the coronavirus is kept under control.
OECD chief economist Laurence Boone says: “The Aust Govt has been very efficient in shielding firms and workers from the worst impacts of the virus.”
Meanwhile, the relative strength of the Aust economy is boosting consumer sentiment.
The monthly Westpac-Melbourne Institute consumer sentiment index jumped 6.3% in the June survey – and has now recovered the full 20% loss seen when the coronavirus pandemic exploded in March.
Westpac chief economic Bill Evans thinks the rebound is remarkable.
He says: “Confidence has clearly been buoyed by Australia’s continued success in bringing the coronavirus under control.”
Another symptom of improving confidence is that many of the Australians who asked for a mortgage holiday have asked their lenders to let them resume making their loan repayments – sooner than expected.
About a third of ANZ customers who deferred loan repayments have recommenced paying down their debt, according to Mark Hand, ANZ’s group executive of Australia retail and commercial. Customers are increasingly looking to unwind loan deferrals, which were offered for up to six months, as social restrictions are eased, Hand says. He says: “We’re seeing some customers call us to unwind the arrangement because they’ve got some certainty, they’ve got that confidence going forward.”
At Westpac, more than 4,000 home loan customers have cancelled their mortgage support package which included a three-month repayment deferral.
Domain economist Trent Wiltshire says the early return to repayments reflects rising consumer sentiment and is a promising sign for the housing market.
New data is showing an increase in buyer demand as the country continues to see easing of COVID-19 restrictions, according to REA Group which runs the nation’s biggest real estate platform, realestate.com.au.
REA Group has launched a new residential buyer demand index – the REA Insights Weekly Demand Index – which aims to analyse high-intent buyer activity.
The on-site consumer activity allows REA Insights analysts to model behavioural demand and home in on the activity of serious buyers.
The characteristics of SERIOUS buyer activity includes the number of visits to a listing, looking at the photos for a listing multiple times, saving the property, sharing the property and/or making an enquiry with agents.
According to the index, there were 11.2 million visits to realestate.com.au in the latest month under review.
Cameron Kusher, director of economic research at REA Group, says: “As the recovery from the impacts of COVID-19 continue, this forward-looking index shows the buyers are back – but sellers are yet to follow.”
Greater activity from buyers is translating into solid results at auctions around the country.
Almost two-thirds of homes taken to auction over the past week sold under the hammer, as auction numbers rose sharply in both Sydney and Melbourne.
In Sydney, Domain reported 70% of the 449 homes offered sold at auction based on preliminary figures, up from 315 homes and a final clearance rate of just over 50% the previous week.
In Melbourne, auction numbers more than doubled to 410 from 143 a week prior, while the preliminary clearance rate rose to 57% from a final figure of 47% recorded a week prior. Domain economist Trent Wiltshire says there is growing buyer confidence due to the improving economic outlook and with restrictions easing, but transaction numbers remain low.
Now, according to new data from the nation’s biggest e-conveyancing operator, property transfer numbers for June are looking stronger than a year ago, new property listings are up across the nation and refinancing activity was up 30% last month,.
Property Exchange Australia chief executive Glenn King says that while the coronavirus pandemic has triggered some slowdown in property settlements over the past three months, it has been nothing near the doomsday levels that some predicted.
King says: “We are not seeing the drop to the degree that was initially predicted. There has been a slowdown but nowhere near to the extent that had been suggested. “People are still looking at transacting in property. It is safe and secure. We are seeing some positive signs of recovery in NSW and other jurisdictions.
We are also seeing significant increases in refinancing with consumers taking advantage of special offers in the market.”
Meanwhile, new home listings have increased in Sydney, with new stock on the market rising 46% over the last four weeks, the latest Domain data shows.
Melbourne listings rose 22%, compared to the previous four weeks. Domain economist Trent Wiltshire says the surge in Sydney listings is a reflection of growing confidence among buyers and sellers. He says: “It’s a big rebound in listings, particularly for Sydney.” Buyers and sellers who have been holding off due to uncertainty during the lockdown are now more confident to enter the market, with the recovery looking better than expected.”
SQM Research today has revealed the national residential rental vacancy rate has recorded a minor decrease over the month from 2.6% in April to 2.5% in May 2020.
Vacancies fell in May in five of the eight capital cities, but rose in Sydney and Melbourne, which are the cities with the highest vacancy rates at the moment.
But, despite the impacts of Covid-19 which has seen vacancies rise markedly in some of the capital city CBD areas, in six of the eight cities the vacancy rate is between 1.2% and 2.5%. SQM says rental listings appear to have peaked, with falls in the number of properties available for rent in the past couple of weeks.
SQM also published today its latest data on house prices.
In the month ending 23 June, the house price index rose 0.5% nationally, with five of the eight capital cities recording small increases in house prices. Sydney and Melbourne, however, both recorded decreases in the past month. But in annual terms, all capital cities have house prices higher than a year ago, except
Darwin. Sydney, Melbourne and Hobart all remain 10-12% higher than last year with their house prices.
The chance to build a brand-new home for a bargain has lured thousands of Aussie buyers into the market.
Developers across the nation report rising sales and inquiries in the days after the launch of the federal government’s new HomeBuilder scheme, which provides $25,000 grants to build new homes. Western Australia and regional Victoria are the best places to be a first home buyer in the wake of the HomeBuilder $25,000 cash grant, as regional grants and tax incentives give first- time buyers in those states the most extra benefit.
While the federal government scheme gives applicants across the country the same benefit, WA’s recent announcement of an extra $20,000 last weekendfor first home buyers and the extension by a year of Victoria’s $20,000 grant for new homes in regional areas, gave qualifying buyers the biggest assistance.
Taking into account all cash grants and the maximum stamp duty concessions available, regional Victorian buyers top the handout list with $51,070 and Northern Territory buyers can get up to $50,600.
But in terms of affordability and bang for buck, WA – where the available benefits were up to $44,000 – are the best, because prices there are low.
So, overall, the picture is quite positive.
- The Australian economy is ranked by the OECD as one of the strongest in the world,
- Consumer confidence is rising,
- Prices are remaining firm or rising a little in most markets across the nation,
- Vacancy rates overall have fallen recently and remain low in most cities,
- Vendors are becoming more confident and are listing homes are sale in greater numbers,
- And Australians are busy buying land to take advantage of the Fed Govt grant to help them
build a new home.